Copper

[kraftdinner]

Quadra sees copper production shortfall in 2006


2006-10-23 07:25 MT - News Release

Mr. Paul Blythe reports

QUADRA UPDATES PRODUCTION GUIDANCE AND HEDGE POSITION FOR REMAINDER OF 2006

Quadra Mining Ltd.'s recoveries achieved at the Robinson mine in Nevada are expected to be significantly below forecast for the balance of 2006 and as a consequence, copper production for the year is now expected to be approximately 115 million pounds of copper in concentrate. This compares with previous guidance of 125 million pounds to 130 million pounds. Gold production is expected to remain unchanged at 55,000 ounces to 60,000 ounces.

The lower-than-expected recovery is due to the presence of high levels of oxide copper contained within the ore in the supergene zone currently being mined. A portion of this oxide copper is soluble in acid and was recognized in the resource database with appropriate discounts made to forecast recovery. The new forecast is based on the presence of non-acid soluble oxide which is not recoverable by flotation. Previous planning and forecasting procedures regarded all copper that is not acid soluble as sulphide and therefore amenable to recovery by flotation. The difference was therefore not predicted. Total production in the third quarter was 33.3 million pounds, representing a shortfall of 3.7 million pounds compared with expectations, due to a recovery in September of 56 per cent compared with an expected recovery of 71 per cent. The non-acid soluble oxide material is expected to impact recoveries for the next two months as the operation mines through the remainder of the supergene zone. Once below this zone, recoveries are expected to return to more typical levels.

As a result of this shortfall and product shipment delays encountered at the end of the third quarter that caused a concentrate inventory buildup at the mine, approximately 11,000 tons of existing hedges will have to be rolled forward into 2007.

In order to be able to continue to draw on the company's working capital facility which provides liquidity protection between the cost of production and the receipt of sales, Quadra's board has approved management to hedge up to 16,000 tons of the remaining 2006 copper metal production. To date the company has hedged approximately 3,200 tons of fourth quarter copper production at a weighted average price of $3.36 (U.S.) per pound.

Quadra's president, Paul Blythe, says: "As a skarn deposit, Robinson is metallurgically complex and while we are disappointed to have encountered more recovery issues in the Veteran pit, the operating team is rapidly developing a greater understanding of the deposit and an expertise in optimizing the mineralogy. We've been building on the knowledge gained through the drill program earlier in the year and actual results and are comfortable that we know what is ahead of us in the next several push backs in the Veteran pit."

The company will release its third quarter 2006 financials on Wednesday, Nov. 8. A conference call to discuss the financial results and elaborate further on production results will be held at 8 a.m. (Pacific Time) (11 a.m. (Eastern Time)) on the same day.

This press release has been reviewed by and received the approval of the board of directors.

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